School District 43 and the union representing its support staff have reached an agreement that will resolve a dispute over a controversial change in workers' post-retirement medical benefits.
And the district claims the deal will save SD43 money.
Members of CUPE Local 561 protested when SD43 announced last year it was cancelling extended medical benefits for retirees. A $50-million solvency gap in the workers’ non-teaching pension plan (NTPP) run by SD43 prompted the move and sparked a year of negotiations.
The deal announced in a press release Jan. 30 will see the pension of CUPE members, as well as other SD43 excluded staff, moving from the NTPP to the Municipal Pension Plan (MPP), which serves a number of B.C. health organizations, municipalities and school districts.
Under the new plan, workers will pay a higher premium but their wages will be increased by 4% to cover the extra cost and other adjustments will be made using approximately $3.5 million from funds set aside for the now-closed post-retirement group benefit (PRGB) to pay for it each year.
CLOSURE DISPUTED
Originally the source of friction between the union and SD43, sparking a protest and a media campaign last year, the closure of the PGRB makes it possible for workers to move over to the MPP, and if any funds are left over, they will go back to the district, said Chris Nicolls, the district’s chief financial officer and secretary treasurer, who called the deal "a win all the way around."
MPP is a significantly larger plan, covering 32,000 workers, while SD43 won’t pay any more in premiums for the transfer.
“We will pay the same amount that we are currently paying,” Nicolls said, noting the district shouldn’t be in the pension business.
And by switching to the MPP, the district will no longer have to deal with a $50 million solvency gap an actuarial report identified in the SD43 non-teaching pension plan back in 2016.
“All of that was designed to not take any money out of the classroom and have staff not lose jobs,” Nicolls told The Tri-City News.
Union workers had been concerned the PGRB closure would eliminate their post-retirement health and dental benefits but those will now be provided by the municipal plan, and their pension will be indexed to inflation.
It’s “good deal for both active members and retirees,” CUPE Local 561 president Dave Ginter stated in an earlier press release.
NO WORSE OFF CLAUSE
The deal includes a “no worse off” guarantee for members who retire within five years of transferring to the MPP and the agreement is retroactive to Jan. 1, 2018 with a formal asset transfer of about $80 million to take place in March, followed by MPP board acceptance in May.
The deal also removes a financial cloud that has been hanging over the district’s books for some time, owing to changes in the generally accepted accounting principles that were mandated by the province in 2005. (Those principles required SD43 to put funds into the pension plan to cover future payouts for current workers, a solvency gap that grew to $50 million over time.)
In a press release, board chair Kerri Palmer Isaak called the agreement “a milestone” that provides the district with financial stability.
